Sources of Revenue:

Other Fund Toll Road Revenues

Legislation creates:

Neither Program nor Fund

Fiscal Note Summary

Effect this measure will have on costs and revenues of state government.

Adoption of this legislation in its present form would render the Parkways Authority and could also render the WV Division of Highways without funds to operate the West Virginia Turnpike after February 1, 2020. This would not only affect the missions and functions of the West Virginia Parkways Authority, but also, have a profound effect upon all the assets and funds of the Authority and upon the obligations of the State of West Virginia. At present, the West Virginia Turnpike is operated and maintained by the Parkways Authority with Turnpike toll revenues paid by the users of the highway. Thus, no State tax or general revenue dollars are used in the maintenance or operation of the Turnpike or in paying debt service on Turnpike bonds issued by the Authority. In the scenario created by this version of House Bill 4269, the Parkways Authority would even be left without funds to accomplish the legislative mandate of removing the toll facilities, a task that would cost an estimated $20 million dollars.

Fiscal Note Detail

Effect of Proposal	Fiscal Year
Effect of Proposal	2012 Increase/Decrease (use"-")	2013 Increase/Decrease (use"-")	Fiscal Year (Upon Full Implementation)
1. Estmated Total Cost	0	0	0
Personal Services	0	0	0
Current Expenses	0	0	0
Repairs and Alterations	0	0	0
Assets	0	0	0
Other	0	0	0
2. Estimated Total Revenues	0	0	0

Explanation of above estimates (including long-range effect):

Memorandum

There is a technical defect found in this bill under §17-16A-18(b) which mandates that, effective February 1, 2020, the Parkways Authority or its successors shall discontinue, remove and not relocate all toll collection facilities on the West Virginia Turnpike as it existed on June 1, 1989. The original intent of this section as previously adopted in the earlier 1989-90 version (when first enacted) was to remove, no later than February 1, 1990, the side tolls on the Turnpike, with the exception of North Beckley (Route 19), leaving the three mainline toll barrier facilities intact and the North Beckley Toll Plaza intact. By amending this section of the statute, it appears to mandate that tolls/toll facilities will/must be removed from the Turnpike no matter whether the Parkways Authority is expected to maintain the road or if it is turned over to the Secretary of Transportation (Division of Highways). In other words, these changes conflict with §17-16A-18(a) which says when the “bonds secured by West Virginia Turnpike toll revenues have been paid … if then in good condition and repair to the satisfaction of the Commissioner of the State Division of Highways, (the Turnpike) shall be transferred to the State Division of Highways and shall thereafter be maintained by the State Division of Highways free of tolls.” Also, the committee amendment to House Bill 4269 included an additional provision that “money to maintain the highway is in place” before tolls must be removed. Regardless of these two provisions, the proposed changes to section (b) [West Virginia Code §17-16A-18(b)] removes any ability of the Secretary of Transportation/Commissioner of Highways to factor in the condition of the highway and funding available to the DOH when determining whether to accept the maintenance obligation of the West Virginia Turnpike. The bill suggests changes to §17-16A-10(i) by adding the following language: “…bonds may not be issued on any parkways project related to the West Virginia Turnpike or which would use West Virginia Turnpike toll revenues as a funding stream for the bonded indebtedness…” This change to the bill does not appear to be necessary since the existing statutory language in §17-16A-11(d) reads as follows: “…the Authority may not issue parkway revenue bonds under this section for projects on the West Virginia Turnpike after June 30, 2010…” As currently constituted, the Parkways Authority is prohibited by statute from issuing new debt with regard to the 88-mile West Virginia Turnpike (the Turnpike being defined in its enabling legislation as beginning in Charleston to a point approximately one mile south of the intersection of Interstate 77 and U.S. Route 460 near Princeton in Mercer County, West Virginia, which road is presently a part of the federal interstate highway system). It also states in the existing legislation, under §17-16A-10(h), that “the proceeds of the bonds of each issue shall be used solely for the payment of the cost of the parkway project or parkway projects for which bonds were issued…” and in §17-16A-2 “…that only the revenues of the project or projects for which bonds are issued shall be obligated to pay the debt service on the bonds…” In 2010, Senate Bill 427 was enacted which again renamed and reorganized the West Virginia Parkways Authority. This bill gave the Parkways Authority the authorization to construct new toll road projects by issuing bonds secured with toll revenues; however, bonds sold for new toll road construction cannot be used for the West Virginia Turnpike pursuant to Section §17-16A-10(a) which states that “the Parkways Authority is authorized to provide by resolution for the issuance of parkway revenue bonds of the state for the purpose of paying all or any part of the cost of one or more parkway projects: Provided, That this section shall not be construed as authorizing the issuance of parkways revenue bonds for the purpose of paying the cost of the West Virginia Turnpike…” The Parkways Authority does not receive any gas tax revenue or any other federal or state tax revenue to assist with maintaining or operating the West Virginia Turnpike. If the Turnpike tolls were eliminated after re-payment of the bonds in 2019, as targeted by this House Bill 4296, the State of West Virginia would not only lose in excess of $85 million annually in toll revenues now used to operate and maintain the 415 lane miles of interstate highway, 116 bridges, three travel plazas and one welcome center (Princeton, WV) currently operated and maintained by the Parkways Authority, it would also represent the loss of approximately 387 jobs (most with benefits) currently held by the various toll, maintenance and administrative personnel of the Parkways Authority. Most of the annual Turnpike toll revenue comes from out-of-state passenger and out-of-state commercial vehicles (approximately 76% of all Turnpike toll revenue). Without the toll revenue, the cost of operating the West Virginia Turnpike would shift to the taxpayers. Therefore, if the bill became law, the WVDOH appears to be mandated to maintain and operate the Turnpike with no toll revenues to support those operations. Since there are no replacement revenue sources, the State Road Fund would likely be the only source of revenue available to the DOH to provide funding. The WV Secretary of Transportation has reported that the State Road Fund is funded primarily by the gas tax and revenues from that source are currently stagnant and in danger of dwindling even further as people drive less and use more fuel-efficient cars. In terms of buying power, the same dollars in that Fund now buy 30% less than they did in 1998. Meanwhile, federal funds are also dwindling. To return from a 31-year repaving schedule, the current situation, to a more ideal 12-year rotation, the Division of Highways would need an additional $700 million of funding on average per year to augment the revenue needed for statewide funding. West Virginia Secretary of Transportation Paul Mattox also reported the following: • The state has 36,000 miles of roads (only 27% of them are eligible for federal funds; while gas tax revenues increased by just over $100 million during a 10-year period (from $280.8 million in FY 1999 to $388.1 million in FY 2008), the wholesale fuel tax disappeared in FY 2006; at its peak it added $85 million to the fund • State Road Fund revenues have increased by less than $13 million since 1999 (from 656.9 million then to $669.2 million in 2008); • Federal funds have dropped from $438.6 million in 2005 to $342.9 million in 2008; • The new Congress has placed a moratorium on earmarks; • Congress is considering a reduction in highway funding and if that happens the DOH stands to lose $79 million (about 20% of its yearly federal-aid construction budget); • The federal highway authorization bill is on its seventh temporary extension through the end of March 2012. WV Turnpike tolls not only provide funds paid directly by the roadway users to maintain the Turnpike, but in the process free up scarce state transportation dollars to maintain other roads and bridges in West Virginia. The Interstate system, authorized in 1956, is approaching the end of its useful life and is in need of massive rehabilitation and rebuilding. If the Turnpike tolls were terminated, DOH would immediately be faced with maintaining and fully funding one of the most heavily used (and most costly to maintain) sections of interstate in West Virginia without the ability, now provided by statute, to exercise discretion to keep from further depleting the State Road Fund by refusing to accept the West Virginia Turnpike (after the bonds are paid) if it is not in “good condition and repair” (referred to below). The WV Turnpike, a $1 billion asset, consists of the following: Roadway • 88 Linear miles of roadway • 415 lane miles of roadway • 116 bridges • 1,711,900 square feet of bridge deck • 99.6 miles of guardrail • 6,248 culverts • 4,070 signs • 900 roadway lights • 80 lighted signs • 595 acres of mowing • 59 impact attenuators Facilities • 8 maintenance facilities • 3 travel plazas • 2 rest areas • 4 toll barriers • 4 toll offices • 600 site lights • 20 security systems • 2 water treatment facilities • 2 sewage treatment facilities • 5 roadway weather information stations • 3 radio towers • 5 salt storage buildings • 4 equipment maintenance garages • 1 headquarters administration building • 3 state police offices The cost to operate and maintain the Turnpike can be broken down into three major areas: Roadway/Facilities Maintenance (routine); capital improvement; and, renewal and replacement. To broaden the scope and magnitude of the cost to maintain the Turnpike, the following more detailed information is provided: Roadway and Facilities Maintenance Snow removal and ice control; pavement patching; courtesy patrol and emergency patrol response; bridge maintenance; equipment cleaning and maintenance; litter pickup; mowing; travel plaza maintenance; upkeep of the four maintenance areas; equipment repairs and maintenance; toll plaza maintenance; water and wastewater treatment; concrete barrier wall repairs; and, overhead message boards and closed circuit television camera maintenance. TOTAL ANNUAL COST: Approx. $16 million annually (which includes salaries for approximately 141 maintenance employees) Capital Improvement Pavement rehabilitation and preservation, bridge deck replacements and facilities rehabilitation. TOTAL ANNUAL COST: Approx. $22 million annually Renewal and Replacement Bridge painting; bridge deck overlays; bridge/facilities retrofit; guardrail replacement; slope reconditioning; culvert repair/replacement; vehicle/equipment replacement; facilities renovation and repair; sign replacement/overlays; roadway lighting; pavement striping and markings; full depth repairs/under sealing of roadways; and, drainage pipe rehabilitation. TOTAL ANNUAL COST: Approx. $10 million annually It should be noted that even with the additional funds from a toll increase that went into effect in August 2009, there remains a substantial amount of deferred maintenance costs associated with the operation and maintenance of the Turnpike. In 2009, the Authority’s Consulting Engineer, HNTB, projected that $335 million was needed to be spent on the Turnpike through 2019, $242 million of which represents the cost of paving. HNTB further concluded that this amount was the bare minimum essential deferred maintenance and capital needs to ensure the Turnpike could be properly maintained and at the same time its overall condition improved, as needed, over the next 10 years. In 2009, a summary of the Turnpike’s infrastructure condition assessment indicated that: 45% of the pavement was in fair to poor condition (1/3 was 20 to 35 year old concrete); average bridge age was 29 years; the then current condition of deck spalls graded out at level of service “D”; many culverts were original 1950’s construction (35% substandard); and, 30% of the guardrail was defective. In addition to all of the above, the Authority continues to absorb the costs of a 31 member State Police detachment that provides patrols and protection on the Turnpike, including radio communications and two Public Service Commission officers, at a cost of $3.5 million annually. Therefore, if this bill became law, those costs also would have to be paid out of either the Division of Highways Budget or the Department of Public Safety budget with the possibility that patrols and protection on the WV Turnpike would have to be eliminated or decreased significantly. Finally, as indicated above, 387 full-time, part-time and temporary Parkways employees (many of whom have benefits) would be unemployed, thereby increasing the drain on already strained unemployment benefits and adversely impacting the related State and county tax base associated with that payroll. Eliminating those jobs also would eliminate the direct and indirect economic benefits to the state, especially southern West Virginia. It is important to note that in 2009, a new discount program for the less frequent Turnpike traveler was implemented. Customers who drive the Turnpike only occasionally can sign up for a WV E-ZPass® at a cost of $5.00 per year and then pre-pay funds via credit card into their account ($20.00 minimum account balance). This plan provides customers of the WV Turnpike a 35% savings on their toll rate (the toll rate for a car is reduced from a $2.00 cash rate to an E-ZPass discount rate of $1.30 per plaza). The toll is automatically deducted from the pre-paid account as they drive through the toll plazas. Frequent users of the Turnpike, such as daily commuters driving to and from work, school, church, etc., can enroll in an E-ZPass plan that costs $95/year, per plaza (or $25/quarter, per plaza) for unlimited travel. This plan provides up to a 90% savings in toll rates for the high frequency user and the cost may be eligible for deduction from WV income for tax purposes. The WV E-ZPass is available to anyone, regardless of state or country of residence.

Person submitting Fiscal Note: Gregory C. Barr, General Manager
Email Address: gbarr@wvturnpike.com